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Macy's (M) CEO Jeff Gennette Presents at Morgan Stanley's Global Consumer and Retail Conference (Transcript)
MMacy's(M)2020-12-01 16:47

Summary of Macy's Inc. Conference Call (December 1, 2020) Company Overview - Company: Macy's Inc. (NYSE:M) - Industry: Retail, specifically department stores - Revenue: Nearly 25billionin2019acrossover770storelocations[2][5]−∗∗Management∗∗:CEOJeffGennetteandCFOAdrianMitchell[3]KeyThemesandInsights1.ResponsetoCOVID−19−∗∗CashPreservation∗∗:Focusedoncashpreservationduringthecrisis,leadingtorefinancingandastrongliquiditypositionheadingintoQ4[5]−∗∗ChannelShift∗∗:Rapidshifttodigital,withstoresactingasfulfillmentcentersduringclosures,handlingover5025 billion in 2019 across over 770 store locations [2][5] - **Management**: CEO Jeff Gennette and CFO Adrian Mitchell [3] Key Themes and Insights 1. Response to COVID-19 - **Cash Preservation**: Focused on cash preservation during the crisis, leading to refinancing and a strong liquidity position heading into Q4 [5] - **Channel Shift**: Rapid shift to digital, with stores acting as fulfillment centers during closures, handling over 50% of digital business [6][12] - **Innovation**: Launched curbside pick-up and partnered with Klarna and DoorDash to enhance customer experience [7][8] 2. Customer Engagement and Adaptation - **Customer Journey**: Emphasized the need to adapt to changing customer behaviors, focusing on digital engagement and safety measures [10][12] - **Product Expansion**: Expanded offerings in home categories and other high-demand areas based on customer feedback [11] 3. Polaris Strategy - **Digital Focus**: Accelerated digital strategies, aiming for e-commerce to represent 40% or more of sales [22][23] - **Store Optimization**: Plans to optimize the store experience and explore off-mall locations to capture market share from competitors [18][48] - **Cost Management**: Resetting the cost base to improve profitability while managing SG&A expenses [20][60] 4. Market Opportunities - **Market Share Gains**: Anticipated market share opportunities due to competitor closures, particularly in beauty and dress categories [46][48] - **Brand Relationships**: Strong relationships with brands, focusing on curated assortments and private label growth [50][51] 5. Financial Performance and Future Outlook - **Cost Savings**: Achieved 630 million in annualized cost savings, with SG&A down over 22% in Q3 [60][62] - Capital Allocation: Focus on liquidity and financial flexibility, with plans to reinstate dividends and share repurchases when appropriate [67][69] Additional Insights - Customer Loyalty: Increased loyalty program penetration to over 56%, with significant new member acquisition [42] - E-commerce Growth: E-commerce grew 53% in Q2 and 27% in Q3, with expectations to maintain high penetration levels [22][23] - Technology Investments: Continued investment in technology and analytics to enhance decision-making and customer experience [39][58] Conclusion Macy's Inc. is navigating a challenging retail landscape by focusing on digital transformation, optimizing its store fleet, and enhancing customer engagement. The company is well-positioned to capitalize on market share opportunities arising from competitor closures while maintaining a strong emphasis on cost management and financial flexibility.